The choice of financial aid instruments (original) (raw)

Aid Effectiveness: The Case of General Budget Support

This article describes general budget support as an instrument of development cooperation. Based on poverty reduction strategies, poorer developing countries are increasingly receiving general budget support which enables their governments to carry out their core responsibilities more effectively. Strengths, weaknesses, opportunities and risks are discussed in a holistic approach. In view of aid effectiveness and efficiency the author draws on an evaluation which was carried out in the context of the DAC/OECD in 2006, as well as on experience made in Switzerland"s budget support engagement. He argues that the budget support methodology could also inspire the cooperation with non-governmental organisations.

Different Aspect and Nature of Foreign Aid

The concept of foreign aid is widely used and accepted as a flow of financial resources from developed countries to developing countries on development grounds. However, The role and effects of foreign aid in the economic development of developing countries have been and are controversial issues. foreign aid is advocated as necessary for the promotion of economic development in the least developed countries (LDC's). The purpose of foreign aid programme to LDC's is to accelerate their economic development up to a point where a satisfactory rate of growth can be achieved on a self sustaining basis. Thus the general aim of foreign aid is to provide in each LDC a positive incentive for maximum national effort to increase its rate of growth. However, the effects of foreign aid on the economic development of developing countries have been controversial issues. Some economic studies of foreign aid suggest that it is successful, as the other studies find no relationship between foreign aid and growth rate of output and suggest that it also retards economic growth in developing countries by leading to the structural distortions of the economy.The development of Bangladesh is still characterized by two parallel trends. The first is the mobilization of concessional foreign aid, and the second is getting effective market access for exports from Bangladesh. The threat of climate change, food crisis, fuel shortage and financial crisis may have an impact on implementation of PRSP. Hence, aid as a source of financing for reaching the MDGs is still an important component of required resources. However, unless this aid can be made more effective, the objective of reducing poverty may remain a far-fetched goal. The aid scenario in Bangladesh has been undergoing changes during the last few years. The change is manifested not only in terms of sources and volume of aid, but also in terms of sectoral allocation and utilisation. Bangladesh is coming out of aid dependency. This paper will give a short description of problem and prospect of foreign aid in Bangladesh.

FINANCIALISATION OF OFFICIAL DEVELOPMENT ASSISTANCE

Official Development Assistance is a significant global enterprise. Organsiations engaged in funding and implementing ODA (the bilateral donors, multilateral organsiations such as the World Bank and IMF) have unprecedented political and economic influence over a large number of sovereign developing countries. This paper analyses if, and how financialisation impacts on development aid, and implications for effective aid policy agendas, drawing on and linking critical debate on finacialisation, and ODA. Subsequent to the Global Financial Crisis (GFC) and the persistence of the European Monitory Crisis (EMC), specific needs of developing countries became increasingly sub-ordinated to political and ideological power relations between ‘real’ economics and financial economics otherwise known as financialisation. The paper finds ‘financialisation’ as the ideological, political and economic catalyst for economic growth potentially confusing long-term development to combat poverty, and a short term need to overcome the lack of financial capacity in developing recipient countries. Sustainable economic development requires developing countries to forsake the pursuit of financialisation and to re-delineate their national finance, trade and investment regimes, and re-state it in a balanced manner as to take into account their unique economic development needs rather that the donor agencies’ demands and to advance their own ‘real’ economies.

The role and importance of state aid schemes in financing the national economy

Journal of Financial and Monetary Economics , 2019

The financing of the national economy is supported by multiple financing mechanisms and instruments such as financing through the issuance of government securities, financing through European funds and with the contribution of the national budget through the capital market, etc. and last but not least through state aid schemes under the direct supervision of the Competition Council and in compliance with the directives of the European Commission. State aid schemes are national and European funding instruments for the economy, regulated by law, and whose implementation mechanism is presented in governmental programs administered at governmental decision-making level. Moreover, these sources of funding (state aid schemes) are also given in the current context of globalization of financial markets and the emergence of new integrated financial technologies at national and international level ("fintech" digital financial technologies and integrated financial services). The emergence of new financial instruments at national and global level has a direct impact on the sustainability of finances.

Syllabus: Graduate Seminar on Foreign Aid (PS 589)

This seminar provides an intensive study of the literature on foreign aid, drawing mostly from political science and economics and to a lesser extent from the broader domain of development studies. The course has been structured with the goal of improving our understanding of the quantitative analytical methods used in analyzing foreign aid allocation and effectiveness. It therefore includes a number of methodological readings to help us diagnose the challenges and pitfalls of the empirical literature that we will read. This focus on empirical methodology is expected to help students in international relations and comparative politics make better research design decisions when dealing with time-series crosssectional data. By the conclusion of the course, students should have a better understanding of claims that are made in the literature about (1) the reasons for foreign aid; (2) the development effectiveness of foreign aid; (3) the way in which foreign aid donors allocate aid and make project design decisions; (4) the differences between bilateral and multilateral aid; (5) bureaucratic pathologies that affect the development industry; and (6) the unintended consequences of foreign aid, among other topics. Students also should have a greater familiarity with the available foreign aid data and its strengths and weaknesses.